artnet AG — Interim / Quarterly Report 2013

Nov 8, 2013

Interim Group Management Report Nine Month Report 2013

Table of Contents

• 3 artnet AG Interim Group Management Report Nine Month Report 2013
• 10 artnet AG Consolidated Balance Sheet
• 11 artnet AG Condensed Interim Consolidated Income Statement
• 12 artnet AG Statement of Changes in Consolidated Equity (USD)
• 12 artnet AG Statement of Changes in Consolidated Equity (EUR)
• 13 artnet AG Consolidated Cash Flow Statement
• 14 Notes to the Interim Consolidated Financial Statements
• 20 Authorities, Offices Investor Relations, Information on artnet Stock

artnet AG

Interim Group Management Report For the Nine Months Ended September 30, 2013

Business Development

Overview of the Business Development for the Nine Months Ended September 30, 2013

During the nine months ended September 30, 2013, the Group's revenue decreased by 4%, from 10,207,000 EUR in 2012 to 9,761,000 EUR. In US dollars, the revenue decreased by 2%, from 13,080,000 USD to 12,853,000 USD.

Revenue from artnet Auctions has increased by 13% when compared to the same quarter in the previous year. However, the sales revenue for the first nine months decreased in euros by 14% (12% in US dollars) from the previous year by 265,000 EUR (282,000 USD). The implementation in July 2013 of the new listing fee for lower-priced lots and the new commission model resulted, as expected, in a slight decrease in the number of lots offered up to a lot value of 25,000 USD. The number of lots offered above this value increased slightly. The goal, to raise the quality and value of the artworks offered, has been achieved during the first months since implementing the new pricing structure, and will continue to be improved. Buyers' and sellers' commissions (including listing fees) in August and September have been increased compared to the previous months, from approximately 22% to 25%. Compared to the corresponding period last year, commissions during the nine months ended September 30, 2013 increased by 4% to 23% on average.

Revenue from artnet Galleries in the first nine months of 2013 decreased compared to last year by 203,000 EUR (133,000 USD), from 3,786,000 EUR (4,851,000 USD) to 3,583,000 EUR (4,718,000 USD). The adjustment of service packages, as well as the improved customer service strategy, led to the lowest attrition rate since 2008. Ongoing product improvements, as well the implementation of artnet Auction House Partnerships, have produced a positive market response.

The artnet Price Database revenue in the first nine months of 2013 increased compared to last year by 62,000 EUR or 2% (214,000 USD or 4%) to 3,795,000 EUR (4,998,000 USD).

In the seasonally weak third quarter, revenue for artnet Advertising fell behind the revenue from the second quarter. However, revenue increased by approximately 29,000 EUR (56,000 USD) compared to the third quarter in 2012. The measures implemented in the reorganization have been helpful in reducing the decline in revenue compared to the first nine months in 2012. Revenue in the first nine months of 2013 amounted to 761,000 EUR (1,002,000 USD), representing a marginal decrease of 40,000 EUR (24,000 USD) compared to 2012.

Results of Operations, Financial Position, and Net Assets

Result of Operations

The results from continued operations increased by 398,000 EUR (510,000 USD), from -373,000 EUR (-477,000 USD) in the same period of the previous year, to 25,000 EUR (33,000 USD). The increase in operating results was achieved, despite declining revenues, by cost savings from the reorganization that started in 2012. The cost of sales for online auctions, client services, and production has been reduced by 288,000 EUR (214,000 USD). General administration expenses from the previous year were influenced by additional costs needed for the relocation to the new office. These expenses are 233,000 EUR (210,000 USD), less than those of the previous year. Expenses for product development have been reduced by 394,000 EUR (453,000 USD), but the expenses for sales and marketing increased by 35,000 EUR (93,000 USD) from the previous year.

The consolidated result of the first nine months of 2013, including discontinued operations, increased by 1,304,000 EUR (1,671,000 USD), from -1,279,000 EUR (-1,639,000 USD) in the previous year, to 25,000 EUR (33,000 USD). The consolidated result of the first nine months of 2012 was affected by the results of the discontinued operations in the amount of -906,000 EUR (-1,161,000 USD).

Currency Conversion

Currency conversion in the consolidated statement of comprehensive income is based on the average exchange rate for the period from January 1 to September 30, 2013 and 2012, respectively. For the first nine months of 2013, the average rate was 0.759 euros/US dollars, compared to 0.780 euros/US dollars for the first nine months of 2012. Currency conversion for the balance sheet is based on the exchange rate at the end of the period. As of September 30, 2013, the rate was 0.739 euros/US dollars, compared to 0.757 euros/US dollars on December 31, 2012, representing a 2.4% decrease.

artnet is subject to exchange rate fluctuations since it invoices in euros, US dollars, and British pounds, but conducts most of its business in the United States. The Group attempts to reduce its exposure to exchange rate differences by billing European customers in euros and British customers in British pounds, and by paying vendors in the same currency with these cash funds.

in the amount of 500,000 EUR (641,000 USD). In contrast, there are cash outflows for the repayment of liabilities from finance lease agreements made between 2009 and 2013.

In total, the cash balance increased from 753,000 EUR (995,000 USD) as of December 31, 2012, to 1,361,000 EUR (1,841,000 USD) as of September 30, 2013. The increase in the amount of 608,000 EUR (846,000 USD) is a result of the loan granted in March 2013 by the main shareholder, in addition to the positive cash flow from operating activities, while the cash flow from investing activities was shown to be negative.

The cash investment policy for the Group is conservative and based on short-term investments. This policy allows all cash to be liquid and available. Based on the average outstanding shares of 5,552,986, liquidity per share was 0.24 EUR (0.33 USD) on September 30, 2013, compared to 0.14 EUR (0.18 USD) on December 31, 2012.

Financial Position

The Group's operating cash flow as of September 30, 2013 was 575,000 EUR (757,000 USD), which represents an increase of 299,000 EUR (394,000 USD) from June 30, 2013. Operating cash flow from continued operations as of September 30, 2012 was 21,000 EUR (8,000 USD). Considering the discontinued operations in 2012, the cash flow from operating activities has increased by 554,000 EUR (749,000 USD), when compared to the previous year.

Group investing cash flow in the first nine months of 2013 was -283,000 EUR (-373,000 USD), as compared to -625,000 EUR (-801,000 USD) in the first nine months of 2012. Last year's investing cash flow was affected by investments made for the purchase of office furniture for the relocation to the new office in New York, as well as by the costs of product development for artnet Analytics. Investments made in the first nine months of 2013 are for external development costs due to the redesign of the company's website.

The cash flow for financing activities was 347,000 EUR (439,000 USD) in the first nine months of 2013, compared to -149,000 EUR (-191,000 USD) in the previous year. This cash inflow was essentially generated by a loan granted by the main shareholder in March 2013,

Asset Position

The balance sheet total was 6,233,000 EUR (8,416,000 USD) on September 30, 2013, compared to 6,009,000 EUR (7,944,000 USD) on December 31, 2012, representing an increase in euros of 3.6% (6% in US dollars).

Trade accounts receivable decreased, compared to December 31, 2012, by 174,000 EUR (207,000 USD) to 749,000 EUR (1,014,000 USD).

Fixed assets decreased by 9,000 EUR to 2,035,000 EUR, whereas in US dollars, it increased by 50,000 USD to 2,752,000 USD. The scheduled depreciation and amortization was offset by development costs for the redesign of the website and purchase of necessary software renewals.

Total current liabilities increased by 286,000 EUR (445,000 USD), from 3,072,000 EUR (4,060,000 USD) as of December 31, 2012, to 3,358,000 EUR (4,505,000 USD) as of September 30, 2013. This increase is due to the necessary allocation of the loan granted on March 31, 2013 from the main shareholder, under current liabilities as it will conclude on May 1, 2014. Without this loan, the short-term liabilities would have decreased by 224,000 EUR (209,000 USD). The cause of the decrease was mainly due to the repayment of deferred liabilities as of December 31, 2012, and of accounts payable. Due to new lease contracts for software licenses, the decrease in current liabilities has been less substantial.

Long-term liabilities include finance lease obligations and office rent amortization, which represent the rent-free period of the lease contract for the new office. Since December 31, 2012, these liabilities decreased in euros by 11% (8.9% in US dollars), from 570,000 EUR (753,000 USD) to 507,000 EUR (686,000 USD).

The Group's consolidated equity was 2,358,000 EUR (3,225,000 USD) on September 30, 2013, compared to 2,368,000 EUR (3,131,000 USD) on December 31, 2012.

The artnet Price Database constitutes an intangible asset that has been developed by gathering auction information over the last 25 years. This valuable asset to the Group has not been attributed full earning recognition on the balance sheet due to accounting rules. Balance sheet assets would be substantially increased if this recognition were allowed by law.

General Information and Business Activities

artnet AG is a holding company listed on the "Geregelten Markt" in the Prime Standard segment at the Frankfurt Stock Exchange. artnet AG's principal holding is its wholly owned subsidiary, Artnet Worldwide Corporation, a New York corporation founded in 1989. artnet AG ("artnet" or "the Company") and Artnet Worldwide Corporation ("Artnet Corp.," collectively "the artnet Group" or "the Group") operate under the trade name "artnet."

Artnet Corp. has two wholly-owned subsidiaries: artnet UK and artnet France sarl. artnet UK Ltd. provides sales and client support in the United Kingdom. As part of the restructuring, the closing of the Paris office was resolved in June 2012.

With a nine month average of 1.3 million unique monthly visitors on its three domains, artnet.com, artnet.de, and artnet.fr, artnet offers the world's most comprehensive art market overview, enabling collectors and art professionals to better navigate the art market by providing timely information about artwork, artists, galleries, price developments, exhibitions, news, and reviews.

As of September 30, 2013, artnet Galleries represents approximately 1,600 of the world's most prestigious art galleries and auction houses from over 55 countries. Members of artnet Galleries are indexed by specialty and location, and represent an aggregate 170,000 works in inventory from 32,000 artists. In addition to all forms of Contemporary, Modern, and Fine Art, artnet Galleries also offers Decorative Art and Design objects from the 1st century BC to the present. With artnet Auction House Partnerships, auction houses have the flexibility to post complete or partial sales on artnet, with the option of linking every lot on artnet back to the same lot in their own online catalogue. All lots are linked to artnet's upcoming auctions calendar and ranked high in artnet and Google search results. artnet Auction House Partnerships provides reporting and direct traffic from artnet to the auction house website.

The artnet Price Database is an updated archive of over 8 million illustrated auction records from over 1,600 of the world's top auction houses, giving price transparency to an otherwise secretive market. Subscribers to the artnet Price Database Fine Art and Design and the artnet Price Database Decorative Art receive access to current results, as well as auction results dating back to 1985, and with that, the most up-to-date and impartial appraisal value for artworks they would like to buy or sell. The artnet Price Database is widely subscribed to by appraisers, dealers, auctioneers, and financiers, as well as by private and government institutions, including the IRS and the FBI. Most importantly, it provides an illustrated "blue book" for private collectors with which to appraise the works they own, and measure opportunities at upcoming auctions or on the dealer market. Dealers and auctioneers also use comparable sales from the artnet Price Database to support the valuation and sale of important works of art.

artnet Market Alert, which is a derivative of the artnet Price Database, informs subscribers by email when artworks by artists they selected come up at auction, or when the works are offered in artnet Galleries or on artnet Auctions.

artnet Analytics, which was launched in May 2012, is the first art index that allows one to value the market performance of artists, customerspecific groups of artworks, and art categories such as Asian Art or Modern Art. The market performance can also be compared to financial indices such as the Dow Jones or S&P 500. This product for analyzing the art market provides its users with reports for over 800 artists and around 46,000 groups of comparable artworks.

With artnet Auctions, artnet has become a business-to-customer transaction platform with an integrated information resource. The main advantage for buyers and sellers on artnet Auctions are the attractive pricing and fast turnaround, which can be finalized in a few weeks, compared to the six months or a year required by brickand-mortar art auctioneers. artnet Auctions routinely sees works by blue-chip Modern and Contemporary artists sell in the five- and sixfigure range.

artnet Monographs is an online art library developed in close collaboration with artists, estates, foundations, and galleries. This growing resource of Modern and Contemporary artists' monographs features comprehensive artwork selections and 148 biographies. artnet Monographs can be viewed free of charge on the artnet website.

Subsequent Events

No reportable events of significant importance have occurred after the balance sheet date.

Risks of the Future Development

artnet holds the view that the risk structure has not changed since December 31, 2012.

Outlook

I am pleased to report that this quarter marked artnet's second consecutive profitable quarter this year. As a result, we are on track to be profitable by the end of 2013. The online art market is witnessing unprecedented growth and exciting expansion. Even amidst a more competitive landscape, our company remains without peer in the industry, with an unmatched and trusted product offering.

The artnet Price Database is the most reliable resource for researching and valuing art sold at auction. In the third quarter, the Price Database added over 1,000 new auction house sales to our records, representing thousands of additional lots. We also welcomed 11 new auction houses to our database, which now covers a total of over 1,450 auction houses spanning three decades.

Following a temporary dip in the number of Price Database subscribers after an increase in the subscription rates, revenue has grown 4% in the third quarter. The Price Database remains the industry standard, and our customer base has grown to serve the needs of subscribers in over 90 countries. We have taken every precaution to ensure that as new markets are included in the database, we uphold the integrity of our data and the standards of transparency on which the database was founded.

Our Price Database team has made considerable efforts to continue to expand coverage of Chinese auction houses, as the Chinese market has become a significant focus for many collectors. The quality of our data will bring additional and much-needed transparency to this market. To achieve this goal in China, artnet has partnered with the China Association of Auctioneers to create collaborative reports on the market, to be launched later this year. In the coming year, our organizations will also work to create crosscultural dialogues on the market by engaging a variety of industry professionals from the United States and China to address issues and opportunities for business practitioners in Mainland China.

While expanding the subscriber base for the Price Database, we continue to gradually increase awareness of our newest and most complex valuation product, artnet Analytics. Awareness of this product and its capabilities continues to improve, and is steadily increasing among the existing artnet client base. Through new initiatives to bundle products, existing clients are being introduced to the dynamic and customizable analysis features these reports can provide. We hope this product will become an essential tool for our clients looking to track and follow the market, using similar quantitative standards available for other asset classes.

In the last fiscal year, ongoing global economic uncertainty resulted in continued financial pressures for many art businesses, including our primary client group, galleries. We are pleased to report that the number of members in our gallery network is growing again. Even amidst a lower volume of members following recession-era cancellations, our revenue levels have stabilized and the cancellations have slowed. Many of our competitors have struggled to create an attractive alternative to our gallery network: while these new options initially seemed to have promise, they failed to provide the same level of access and exposure created by our gallery network. Of the top 25 galleries in New York City alone, 88% are current gallery members, and every one of these galleries subscribes to at least one other artnet product. So far in 2013, the gallery network has generated thousands of email inquiries each month, demonstrating that the gallery network remains an integral part of connecting actual buyers and sellers to galleries worldwide.

As our gallery network continues to grow, we have consistently strived to create new ways to promote our members and help them connect with a larger audience. To expand their reach, we have successfully launched artnet Galleries News, a newsletter highlighting exhibitions held around the world. This newsletter reaches more than 250,000 buyers and sellers of Fine Art each month, and has increased traffic to individual gallery sites.

Advertising revenue continues to lag behind last year by 2%, but we are confident that this trend will be reversed, especially with the upcoming introduction of artnet's new website. To ensure our advertising options are more aligned with the needs of our prospective clients, we have increased the number of advertising platforms to generate awareness and leads for galleries and luxury brands. With over 2 million visitors each month, our site remains the most attractive advertising outlet among any of our competitors.

artnet Auctions had a very successful third quarter, with over 400 lots sold to a total of over 290 buyers from 31 countries. Top artnet Auctions categories include Graffiti and Street Art, photography, and Asian Contemporary Art, and the average lot value reached US\$8,300. Revenue from auctions is up 13% this quarter compared to the same period last year. Among the standout sales in Q3 2013 were works by Modern and Contemporary Masters including Robert Rauschenberg, Andy Warhol, Sam Francis, Pablo Picasso, and Walter de Maria.

The top-selling lot of this quarter was Andy Warhol's Diamond Dust Shoes (1980), selling for an impressive US\$240,000. This work was part of artnet Auctions' popular sale, Cool Works for a Hot Summer. The highlights of the sale included Walter de Maria's High Energy Bar (1966), which sold for US\$30,000; Alighiero Boetti's Cinque per cinque venticinque (1989), which sold for US\$28,200; and Joe Andoe's Untitled (Horse) (1996), which sold for US\$16,200. These sale highlights emphasize the changing nature of the online market, where buyers are becoming increasingly comfortable buying unique artworks online at an even higher price point.

In the past year, our auctions base continued to diversify, and we are now connected to a more global audience than ever before. In the third quarter alone, over 800 new collectors signed up to bid on our auctions platform, bringing the total number of new registrants to over 3,000 so far this year. These buyers and sellers represent almost 60 countries. Our successful third quarter has brought in US\$82,000 above Q3 last year, and this will help us reach the same level of revenue we did in the previous fiscal year.

In the coming months, we are excited to unveil our redesigned website, which we believe will mark a significant step forward in strengthening our brand. artnet has a long and proud tradition of innovation, from the Price Database and gallery network to our online auctions platform. The launch of our redesigned website will introduce a brand new look to our customers, representing a visual paradigm of all the positive changes we have made over the last year. The new site will feature improved navigation and functionalities, which will help our visitors connect with more art collectors and enthusiasts from around the globe. The optimized website structure will leverage traffic and engage visitors through a more dynamic interface. Due to the vast number changes, the launch will be introduced in the coming year in several steps.

We believe that our suite of products will continue to provide a compelling competitive advantage, allowing us to grow in new and existing markets. While we have made tremendous progress and seen the company return to profitability, we also realize the need to aggressively push forward to meet the rigorous goals we have set for the company. Our cost-cutting measures have been successful so far, and we have eliminated almost US\$1.67 million from our expenses in an effort to reduce unnecessary business costs and optimize efficiency. Continuous innovations, and the further development of our products, generate costs. However, the management team is confident that through these innovations and improvements artnet will be the leader in the art market, and we therefore regard these costs as essential investments for our successful future. With a promising third quarter behind us, we are positioned to continue to strengthen our brand, capitalize on the robust opportunities present in the online marketplace, and act as the pioneering industry leaders we set out to be over two decades ago.

Berlin, November 6, 2013

Jacob Pabst Chairman and CEO of artnet AG

artnet AG Consolidated Balance Sheet

For the Nine Months Ended September 30, 2013

	9/30/13 USD	12/31/12 USD	9/30/13 EUR	12/31/12 EUR
ASSETS
CURRENT ASSETS
Cash and cash equivalents	1,840,698	994,773	1,361,012	752,546
Trade receivables	1,013,630	1,221,058	749,478	923,730
Other current assets	515,488	737,968	381,152	558,273
Total current assets	3,369,816	2,953,799	2,491,642	2,234,549
NON-CURRENT ASSETS
Property, plants, and equipment	1,101,083	1,374,634	814,140	1,039,911
Intangible assets	1,651,111	1,327,877	1,220,831	1,004,539
Security deposit	386,845	379,921	286,033	287,410
Deferred tax assets	1,907,577	1,907,577	1,410,462	1,443,082
Total non-current assets	5,046,615	4,990,009	3,731,466	3,774,942
TOTAL ASSETS	8,416,430	7,943,808	6,223,108	6,009,491
EQUITY AND LIABILITIES
CURRENT LIABILITIES
Trade payables	809,652	844,777	598,656	639,074
Accrued expenses and other liabilities	674,252	986,751	498,542	746,477
Provisions	164,770	170,041	121,831	128,636
Liabilities from finance leases	305,284	297,649	225,727	225,171
Liabilities from loans	654,027	–	510,000	–
Deferred revenue	1,897,433	1,760,941	1,402,962	1,332,152
Total Current Liabilities	4,505,418	4,060,159	3,357,718	3,071,510
NON-CURRENT LIABILITIES Office Rent Amortization	321,599	484,933	237,790	366,852
Liabilities from finance leases	364,092	267,896	269,210	202,663
Total non-current liabilities	685,691	752,829	507,000	569,515
TOTAL LIABILITIES	5,191,109	4,812,988	3,864,718	3,641,025
SHAREHOLDERS' EQUITY
Subscribed capital	5,941,512	5,941,512	5,631,067	5,631,067
Treasury stock	(269,241)	(269,241)	(264,425)	(264,425)
Retained earnings	52,250,839	52,240,459	50,870,756	50,862,873
Loss carry-forward	(54,925,977)	(51,784,190)	(53,909,439)	(51,482,744)
Consolidated net income	32,535	(3,141,787)	24,707	(2,426,695)
Foreign currency translation	195,654	144,067	5,724	48,390
TOTAL SHAREHOLDERS' EQUITY	3,225,322	3,130,820	2,358,390	2,368,466
TOTAL LIABILITIES AND TOTAL SHAREHOLDERS' EQUITY	8,416,431	7,943,808	6,223,108	6,009,491

artnet AG Condensed Interim Consolidated Income Statement

For the Nine Months Ended September 30, 2013 and the Third Quarter 2013

	1/1–9/30/13 USD	1/1–9/30/12 Corrected USD	1/1–9/30/13 EUR	1/1–9/30/12 Corrected EUR	1/7–9/30/13 USD	1/7–9/30/12 Corrected USD	1/7–9/30/13 EUR	1/7–9/30/12 Corrected EUR
Revenue
artnet Galleries	4,718,159	4,851,451	3,582,970	3,786,072	1,515,968	1,559,502	1,144,181	1,247,813
artnet Price Database	4,997,716	4,783,960	3,795,266	3,733,402	1,732,276	1,579,655	1,308,307	1,264,349
artnet Advertising	1,001,642	1,025,859	760,647	800,580	289,301	233,095	218,128	189,518
artnet Auctions	2,135,474	2,417,980	1,621,679	1,886,992	695,997	613,959	525,373	496,452
Total revenue	12,852,990	13,079,249	9,760,562	10,207,046	4,233,541	3,986,211	3,195,989	3,198,132
Cost of sales	5,736,436	5,950,851	4,356,249	4,644,044	1,908,014	1,802,798	1,440,523	1,446,725
Gross profit	7,116,554	7,128,398	5,404,313	5,563,002	2,325,527	2,183,413	1,755,466	1,751,407
Other Operating Expenses
Sales and marketing	1,788,780	1,696,054	1,358,400	1,323,601	597,644	572,833	451,231	457,822
General and administrative	3,264,341	3,474,628	2,478,941	2,711,600	902,849	868,592	680,429	702,867
Product development	1,914,339	2,366,905	1,453,749	1,847,133	725,617	680,591	548,418	547,322
Remuneration from stock options	10,380	94,974	7,883	74,118	1,988	–	1,492	912
Total other operating expenses	6,977,840	7,632,561	5,298,973	5,956,452	2,228,098	2,122,016	1,681,570	1,708,921
Operating Income	138,714	(504,163)	105,340	(393,450)	97,429	61,397	73,896	42,486
Interest expenses	(41,639)	(22,333)	(31,621)	(17,429)	(16,118)	(3,940)	(12,184)	(3,252)
Interest income	173	13,132	131	10,248	53	13,132	40	10,248
Other {expenses}/income	(67,711)	38,827	(51,420)	30,301	26,499	113,211	20,330	87,636
Earnings before taxes	29,537	(474,537)	22,430	(370,330)	107,862	183,799	82,082	137,118
Income taxes	2,998	(2,858)	2,277	(2,230)	(8,655)	8,331	(6,598)	6,395
Continued Operations	32,535	(477,396)	24,707	(372,560)	99,207	192,130	75,484	143,513
Discontinued Operations	–	(1,161,496)	–	(906,431)	–	(346,288)	–	(278,069)
Group Profit or loss	32,535	(1,638,892)	24,707	(1,278,991)	99,207	(154,158)	75,484	(134,556)
Other Comprehensive Income
OCI Recycled: Differences from foreign currency translation	51,587	81,863	(42,666)	101,214	21,490	36,782	(95,459)	(41,315)
Total income for the period	84,122	(1,557,029)	(17,959)	(1,177,777)	120,697	(117,376)	(19,975)	(175,871)
Earnings per share
Basic	0.01	(0.30)	0.00	(0.23)	0.02	(0.03)	0.01	(0.02)
Diluted	0.01	(0.30)	0.00	(0.23)	0.02	(0.03)	0.01	(0.02)
Earnings per share from continued operations
Basic	0.01	(0.09)	0.00	(0.07)	0.02	0.03	0.01	0.03
Diluted	0.01	(0.09)	0.00	(0.07)	0.02	0.03	0.01	0.03
Earnings per share from disccontinued operations
Basic	–	(0.21)	–	(0.16)	–	(0.06)	–	(0.05)
Diluted	–	(0.21)	–	(0.16)	–	(0.06)	–	(0.05)
Weighted average shares
Basic	5,552,986	5,552,986	5,552,986	5,552,986	5,552,986	5,552,986	5,552,986	5,552,986
Diluted	5,552,986	5,552,986	5,552,986	5,552,986	5,552,986	5,552,986	5,552,986	5,552,986

artnet AG Statement Of Changes In Consolidated Equity (USD)

For the Nine Months Ended September 30, 2013

	Subscribed capital
	Issued shares	Amount	Treasury stock	Retained earnings	Loss carry-forward	Foreign currency translation	Total
Balance as of 12/31/2011	5,631,067	5,941,512	(269,241)	52,061,314	(51,784,190)	205,008	6,154,403
Total income for the period	–	–	–	–	(1,638,892)	81,863	(1,557,029)
Remuneration from stock options	–	–	–	94,974	–	–	94,974
Balance as of 9/30/2012	5,631,067	5,941,512	(269,241)	52,156,288	(53,423,081)	286,871	4,692,348
Balance as of 12/31/2012	5,631,067	5,941,512	(269,241)	52,240,459	(54,925,977)	144,067	3,130,820
Total income for the period	–	–	–	–	32,535	51,587	84,122
Remuneration from stock options	–	–	–	10,380	–	–	10,380
Balance as of 9/30/2013	5,631,067	5,941,512	(269,241)	52,250,839	(54,893,442)	195,654	3,225,322

artnet AG Statement Of Changes In Consolidated Equity (EUR)

For the Nine Months Ended September 30, 2013

	Subscribed capital
	Issued shares	Amount	Treasury stock	Retained earnings	Loss carry-forward	Foreign currency translation	Total
Balance as of 12/31/2011	5,631,067	5,631,067	(264,425)	50,723,480	(51,482,744)	145,052	4,752,430
Total income for the period	–	–	–	–	(1,278,991)	101,214	(1,177,777)
Remuneration from stock options	–	–	–	74,118	–	–	74,118
Balance as of 9/30/2012	5,631,067	5,631,067	(264,425)	50,797,598	(52,761,735)	246,266	3,648,771
Balance as of 12/31/2012	5,631,067	5,631,067	(264,425)	50,862,873	(53,909,439)	48,390	2,368,466
Total income for the period	–	–	–	–	24,707	(42,666)	(17,959)
Remuneration from stock options	–	–	–	7,883	–	–	7,883
Balance as of 9/30/2013	5,631,067	5,631,067	(264,425)	50,870,756	(53,884,732)	5,724	2,358,390

artnet AG Consolidated Cash Flow Statement

For the Nine Months Ended September 30, 2013

	9/30/13 USD	9/30/12 Corrected USD	9/30/13 EUR	9/30/12 Corrected EUR
CASH FLOW FROM OPERATING ACTIVITIES
Group profit or loss	32,535	(1,638,892)	24,707	(1,278,991)
Profit/(loss) from continued operations	32,535	(477,396)	24,707	(372,560)
Profit/(loss) from discontinued operations	–	(1,161,496)	–	(906,431)
Adjustments to reconcile net profit to net cash provided by operating activities:
Amortization/depreciation	418,525	382,574	317,828	298,561
Impairment/write-offs for receivables	205,815	220,038	156,296	171,717
Non-cash compensation from stock-options	10,380	94,974	7,883	74,118
Other non-cash transactions	(7,200)	76,670	(5,467)	74,583
Changes in operating assets and liabilites:
Trade receivables	1,613	(171,813)	1,225	(134,083)
Other current assets	222,480	(232,201)	168,951	(181,210)
Security deposits	(6,924)	199,839	(5,258)	155,954
Trade payables	(35,125)	(8,690)	(26,674)	(6,782)
Provisions	(5,271)	–	(4,003)	–
Other liabilities and tax liabilities	(216,303)	302,982	(164,260)	236,448
Deferred revenue	136,492	(70,242)	103,652	(54,621)
Total adjustments	724,483	794,131	550,172	634,686
CASH FLOW FROM OPERATING ACTIVITIES	757,018	(844,761)	574,879	(644,305)
Proceeds from/used in continued operations	757,018	7,663	574,879	20,927
Proceeds from/used in discontinued operations	–	(852,424)	–	(665,232)
CASH FLOW FROM INVESTING ACTIVITIES
Investments in property, plant and equipment	(6,916)	(375,512)	(5,252)	(293,050)
Investments in intangible assets	(366,147)	(425,505)	(278,052)	(332,064)
NET CASH USED IN INVESTING ACTIVITIES	(373,062)	(801,017)	(283,303)	(625,114)
Proceeds from/used in continued operations	(373,062)	(801,017)	(283,303)	(625,114)
Proceeds from/used in discontinued operations	–	–	–	–
CASH FLOW FROM FINANCING ACTIVITIES
Received loan	(201,330)	(190,953)	(152,890)	(149,020)
Repayment of financial lease	640,503	–	500,000	–
NET CASH USED IN FINANCING ACTIVITIES	439,173	(190,953)	347,110	(149,020)
Proceeds from/used in continued operations	439,173	(190,953)	347,110	(149,020)
Proceeds from/used in discontinued operations	–	–	–	–
Effects of exchange rate changes on cash	22,796	5,193	(30,220)	9,007
CHANGE IN CASH AND CASH EQUIVALENTS	845,924	(1,831,539)	608,466	(1,409,433)
CASH AND CASH EQUIVALENTS – start of period	994,773	2,735,520	752,546	2,112,368
CASH AND CASH EQUIVALENTS – end of period	1,840,697	903,981	1,361,012	702,935
PAYMENTS INCLUDED IN CASH FLOW FROM OPERATING ACTIVITIES
Income tax receipts/(payments)	2,998	(2,858)	2,277	(2,230)
Interest payments	(41,639)	(22,333)	(31,621)	(17,429)
Interest receipts	173	13,132	131	10,248

Notes to the Interim Consolidated Financial Statements for the Nine Months Ended September 30, 2013

Corporate Information

artnet AG (hereinafter referred to as "artnet AG" or "the Company") is a publicly traded corporation headquartered in Berlin, Germany. The address of its registered office is Oranienstraße 164, 10969 Berlin. artnet AG was incorporated under the laws of Germany in 1998.

artnet AG holds 100% of the shares in Artnet Worldwide Corporation ("Artnet Corp."), which is located in New York, United States. Artnet Corp. holds 100% of the shares in artnet UK Limited and artnet France sarl. artnet AG and Artnet Corp., together with Artnet Corp.'s wholly owned subsidiaries, are referred to as "the Group" or "the artnet Group."

The Group's mission is to provide a website to art collectors, galleries, publishers, auction houses, and art enthusiasts, where they can research artists and prices of artworks, and find artworks that are currently available at art galleries and auctions around the world. Additionally, artworks can be sold on artnet Auctions, a webbased auctions platform.

The consolidated financial statements were authorized for issuance by the CEO on November 6, 2013.

Basis of Presentation

These unaudited interim financial statements have been prepared in accordance with the International Financial

Reporting Standards (IFRS), and its interpretations adopted by the International Accounting Standards Board (IASB) for interim financial information effective within the EU. In particular, they correspond to the "Interim Financial Reporting" guidelines of IAS 34. They also comply with the German accounting Standard (DRS) No.16 on interim reporting as well as with §§ 37x, 37w of the Securities Trading Act. These financial statements do not include all of the information and footnotes required by IFRS for complete financial statements for year-end reporting purposes.

The following new or revised standards and interpretations became mandatory in fiscal 2013:

Standard (IFRS) or Interpretation (IFRIC)		Mandatory Application in the EU	Endorsed by the European Commission
IFRS 1*	First-Time Adoption of IFRS – Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters	January 1, 2013	December 29, 2012
IFRS 1*	Government Loans	January 1, 2013	March 5, 2013
IFRS 7*	Financial Instruments: Disclosures— Offsetting of Financial Assets and Liabilities	January 1, 2013	December 29, 2012
IFRS 13	Fair Value Measurement	January 1, 2013	December 29, 2012
IFRS 20	Stripping Costs in the Production Phase of a Surface Mine	January 1, 2013	December 29, 2012
IAS 12*	Deferred Tax - Recovery of Underlying Assets	January 1, 2013	December 29, 2012
IAS 19*	Employee Benefits	January 1, 2012	June 6, 2012

* Amendments (changes to existing standards)

The first-time application of these standards does not have an impact on the presentation of the interim consolidated financial statements in 2013.

The same accounting and valuation methods have been applied to this interim report as were applied to the most recent annual financial statements. A detailed description of the accounting policies is published in the notes to the annual consolidated financial statements of 2012.

The management of the Company is convinced that the interim consolidated financial statements include all adjustments of a normal and recurring nature considered necessary for a fair presentation of results for the interim period. Results of the period ended September 30, 2013 are not necessarily indicative of future results.

As of September 30, 2013, the interim financial statements and the interim management report have not been audited in accordance with § 317 of the German Commercial Code or reviewed by an auditor.

The consolidated financial statements have been prepared on a historical cost basis. The balance sheet date is September 30, 2013.

Adjustment of Prior-Year Figures

The German Financial Reporting Enforcement Panel (DPR) has established that the condensed interim consolidated financial statements were incorrect for artnet AG, Berlin for the period ended June 30, 2012:

As of June 30, 2013, the condensed interim consolidated financial statements have posted a revenue of 229,000 EUR from the continued operations, and a loss of 1,374,000 EUR from discontinued operations. The expense of 232,000 EUR was falsely allocated to the discontinued operations. This expense would have carried on despite the closure of the magazine.

Additionally, as per the definition, the closure of the Paris office does not fulfill the requirements of a Discontinued Operation. If the expenses from the Paris office had been distributed among the business divisions, as they were in fiscal 2011, earnings would have been reduced by an additional 512,000 EUR. The incorrect disclosure of earnings from discontinued operations violates IFRS 5.33 (a).

The previous year's information from the condensed interim consolidated financial statement and cash flow for artnet AG for the first nine months of 2012 was corrected in the condensed interim consolidated financial statement for the first nine months of 2013 to reflect the DPR's findings. The revised figures in the charts have been indicated as corrected. All information in this interim statement reflects the modified amounts.

Reporting Period

The consolidated financial statements were prepared for the reporting period from January 1 through September 30, 2013. The fiscal year for all Group companies coincides with the calendar year.

Foreign Currency Translation and Transactions

Amounts mentioned in the interim consolidated financial statements, and notes to the interim consolidated financial statements, are stated in euros (EUR), unless otherwise noted

The currency of the primary economic environment in which the artnet Group operates is US dollars, which is the functional currency of the operating subsidiary Artnet Corp. Transactions in currencies other than US dollars are recorded at the exchange rates prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Gains and losses from foreign currency transactions are recognized as other income/expenses.

On consolidation, the assets and liabilities of the Group's operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period. The accumulated gains and losses resulting from translation are recorded as a separate component of the Group's equity.

Currency exchange rates significant to the artnet Group are the translation of US dollars to euros and of US dollars to British pounds (GBP). The following exchange rates have been used for the currency translation in the periods presented:

	USD to EUR		USD to GBP
	9/30/2013	12/31/2012	9/30/2013	12/31/2012
Current Rate Year End	0.739	0.757	0.620	0.619
Average Rate for the Year	0.759	0.778	0.647	0.631

Basis of Consolidation and Consolidated Companies

The consolidated financial statements include the legal parent company, artnet AG, its wholly owned subsidiary Artnet Corp., as well as the subsidiaries of this company. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

On February 23, 1999, artnet AG entered into a transaction with Artnet Corp. that was treated as a recapitalization of Artnet Corp., with Artnet Corp. as the acquirer of artnet AG (reverse acquisition). The Company accounted for the business merger of artnet AG and Artnet Corp. as a reverse acquisition in accordance with IFRS 3.

On November 1, 2007, Artnet Corp. established artnet UK Limited, which is a wholly owned subsidiary that acts as a sales agent for Artnet Corp. in the United Kingdom.

On July 3, 2008, Artnet Corp. established artnet France sarl, which is a wholly owned subsidiary of Artnet Corp. As part of its restructuring, artnet resolved to close the Paris offices of artnet France sarl in June 2012. The key French market is now supported from our headquarters in New York.

All significant inter-company transactions, balances, income, and expenses are eliminated.

Share Capital

Conditional Capital—Share Based Payments

The shareholders' meeting on July 15, 2009, conditionally increased the capital stock by 560,000 EUR, through the issue of up to 560,000 new no-par value bearer shares, which can be issued as stock options to members of the Company's Board of Directors, members of the management of affiliated entities, and employees of artnet AG or its affiliated entities (Conditional Capital 2009/I).

No shares have been issued from conditional capital at this point.

Authorized Capital

The shareholders' meeting of artnet AG on July 15, 2009 authorized the Board of Directors, with the approval of the Supervisory Board, to increase the capital stock by up to 2,800,000 EUR before July 14, 2014, through the issue of

2,800,000 new no-par value bearer shares in exchange for cash contributions or contributions in kind (Authorized Capital 2009/I).

No shares have been issued from authorized Capital 2009/I at this point.

Treasury Shares

As of September 30, 2013 and 2012, artnet AG held 78,081 of its own shares, representing 1.4% of common stock.

The shareholders' meeting of artnet AG on July 14, 2010, authorized the Board of Directors, with the approval of the

Supervisory Board, to acquire its own shares until the end of July 13, 2015, up to a 10% stake in current share capital. At no point may the acquired shares, together with other shares owned by the company or attributable to the company under Articles 71 et seq. AktG (German Stock Corporation Act), constitute more than 10% of the share capital. The time limit applies only to acquiring—and not holding—the shares.

Related Party Transactions

As of September 30, 2013, financial liabilities of the artnet Group comprise, in addition to the accounts payable and other liabilities, a loan granted by the main shareholder (including interest) in the amount of 510,000 EUR, repayable on May 1, 2014. These measures serve as collateral to potential temporary liquidity bottleneck, which could result from seasonal changes of cash collections. Accounts payable include consulting fees for Galerie Neuendorf AG in the amount of 253,000 EUR.

Income Taxes

Income tax expense is recognized in the interim period based on the best estimate of the weighted average annual income tax rate expected for the full financial year. Due to its tax loss carryforward, Artnet Corp. only has to pay the alternative minimum corporation tax.

The Group reviews the carrying amount of its deferred tax asset once per year, and will review the deferred tax asset in the fourth quarter of 2013 based on the most recent budget for the fiscal years 2014 through 2016.

Discontinued Operations

In June 2012, the management of the Company decided to discontinue artnet Magazine.

The loss from discontinued operations includes the ongoing personnel and material costs that are directly attributable to artnet Magazine, the closure costs incurred in 2012, and proportionate overheads that are allocated via a caused-based break-down. The costs of closing the Paris office are only allocated to discontinued operations to the extent that these relate directly to the production of the French magazine, plus proportionate overheads.

As mentioned in the section entitled Adjustment of Prior-Year Figures, the information for the discontinued operations for the first nine months of 2012 had been corrected in both the condensed interim consolidated income statement and cash flow statement.

No more assets were to be allocated to the artnet Magazine division (discontinued operations) as of September 30, 2013. However, 37,000 EUR of the provisions were attributable to the discontinued operations.

Segment Reporting

The Group reports on the operating segments in the same way it reports operating segment information to the management and supervisory board.

The Group's four reportable continued segments are as follows:

• • The artnet Galleries segment presents the member galleries' artworks that are available for sale online
• • The artnet Price Database comprises all database-related products, including the artnet Price Database Fine Art and Design and the artnet Price Database Decorative Art, as well as the products based thereupon, or artnet Market Alert, artnet Market Reports, artnet Monographs, and artnet Analytics
• • artnet Advertising produces banner as well as national and international advertising on the website
• • artnet Auctions provides an online platform to buy and sell artworks online

The new cost distribution method resulting from the discontinuation of artnet Magazine was applied retroactively to ensure comparability for 2012. Segment performance is evaluated based on profit or loss before taxes. Not directly attributable expenses are allocated to the reportable segments primarily based on the headcount and revenue for each reportable segment.

A measure of total assets or liabilities for each reportable segment is not provided to the management. Therefore, total assets or liabilities are not disclosed for each reportable segment.

EUR September 30, 2013	artnet Galleries	artnet Price Database	artnet Auctions	artnet Advertising	Total
Revenue	3,583,000	3,795,000	1,622,000	761,000	9,761,000
Profit Before Tax	740,000	336,000	(1,218,000)	165,000	23,000
EUR September 30, 2012	artnet Galleries	artnet Price Database	artnet Auctions	artnet Advertising	Continued Operations	Discontinued Operations
Revenue	3,786,000	3,733,000	1,887,000	801,000	10,207,000	41,000
Profit Before Tax	45,000	573,000	(1,021,000 )	33,000	(370,000)	(906,000)

Earnings per Share

Basic earnings per share are calculated by dividing net income by the weighted-average number of common shares outstanding during the year.

Diluted earnings per share are calculated in the same manner as basic earnings per share, with the exception that the average number of shares outstanding increases by adding the potential number of shares from stock option conversions.

The calculation of earnings per share is based on the following data:

	01/01/2013–09/30/2013 EUR	01/01/2012–09/30/2012 EUR
Numerator (earnings)
Consolidated result of the first nine months	24,707	(1.278.991)
Denominator (number of shares)
Weighted average number of ordinary shares used to calculate basic earnings per share (issued and fully paid ordinary shares)	5.552.986	5.552.986
Effect of potential shares: stock options	-	-
Weighted average number of ordinary shares used to calculate dilutive earnings per share	5.552.986	5.552.986

The weighted average exercise price is higher than the average share price in 2013. As a result, there are no diluted shares.

Employees

On September 30, 2013, there were 109 full-time employees, as compared with 117 in the first nine months of 2012. Additionally, the Group employed 9 part-time employees as of September 30, 2013, as compared to 12 in the same period last year, and 8 sales and other consultants, compared to 9 as of September 30, 2012.

Accounting Estimates and Assumptions

The preparation of the consolidated financial statements in accordance with IFRS necessitates estimates and assumptions that influence assets and liabilities, income and expenses, as well as information in the notes to the six-month financial statements. Actual results and developments may differ from those estimates and assumptions.

Estimates made by the management that have a significant effect on the interim consolidated financial statements include the recognition of deferred tax assets and of development costs, the measurement of provisions and accruals, the useful lives of non-current assets, and the assessment of bad debt provisions on accounts receivables.

Notification Concerning Transactions by Persons Performing Managerial Responsibilities in Accordance with § 15a of the Securities Trading Act

The company was not informed about transactions by persons performing managerial responsibilities to § 15a of the Securities Trading Act.

Notification Pursuant to § 26 (1) of the Wertpapierhandelsgesetz (WpHG—German Securities Trading Act)

Redline Capital Management S.A., with its registered office in Luxembourg, Luxembourg, informed us that its share of the voting rights in artnet AG fell below the threshold of 5% on August 13, 2013, and as of this date, amounts to 3.73% (210,035 voting rights out of a total of 5,631,067 voting rights in artnet AG).

Instacom International S.A. SPF, with its registered office in Luxembourg, Luxembourg, informed us that its share of the voting rights in artnet AG fell below the threshold of 5% on August 13, 2013, and as of this date amounts to 3.73%, (210,035 voting rights out of a total of 5,631,067 voting rights in artnet AG). All of the voting rights are attributable to Instacom International S.A. SPF via Redline Capital Management S.A. pursuant to Section 22, sentence 1, no. 1, WpHG.

Mr. Vladimir Evtushenkov, Russia, informed us that his share of the voting rights in artnet AG fell below the threshold of 5% on August 13, 2013, and as of this date, amounts to 3.73%, (210,035 voting rights out of a total of 5,631,067 voting rights in artnet AG). All of the voting rights are attributable to Mr. Vladimir Evtushenkov via Redline Capital Management S.A. and Instacom International S.A. SPF, pursuant to Section 22, sentence 1, no. 1, WpHG.

Report on Post-Balance Sheet Events

No reportable events of significant importance have occurred after the balance sheet date.

Berlin, November 6, 2013

Jacob Pabst Chairman and CEO of artnet AG

artnet AG

Supervisory Board John Hushon, Chairman Hans Neuendorf, Deputy Chairman Piroschka Dossi Management Board Jacob Pabst, Chairman and CEO

Artnet Worldwide Corporation

Jacob Pabst, CEO

artnet UK Ltd. Jacob Pabst, CEO

artnet France sarl

Jacob Pabst, CEO

Addresses

artnet AG

Oranienstraße 164 10969 Berlin info@artnet.de Tel. +49 (0)30 209 178-0 Fax +49 (0)30 209 178-29

Artnet Worldwide Corporation

233 Broadway, 26th Floor New York, NY 10279-2600 USA info@artnet.com Tel. +1-212-497-9700 Fax +1-212-497-9707

artnet UK Ltd.

Morrell House 98 Curtain Road London EC2A 3AF United Kingdom info@artnet.co.uk Tel. +44 (0)20 7729 0824 Fax +44 (0)20 7033 9077

Investor Relations

You can find information for investors and the annual financial statements at www.artnet.com/investor-relations.

If you have further queries, please send an email to ir@artnet.com or send your inquiry by mail to one of our offices.

German securities code number

The common stock of artnet AG is traded on the Prime Standard of the Frankfurt Stock Exchange under the symbol "ART." You can find notices of relevant company developments at www.artnet.com/investor-relations.

Wertpapier-Kenn-Nummer

[WKN] A1K037 ISIN DE000A1K0375

Concept and Production Artnet Worldwide Corporation

©2013 artnet AG, Berlin